Big plantation firms asked to limit expansion

JAKARTA (JP): Minister of Forestry and Plantations Muslimin Nasution has asked major plantation companies to keep on hold any plans to expand their plantation areas to allow for development of small and medium plantation estate firms.

"Big plantation estates should give more opportunities to middle and small-scale plantation firms to grow. The medium and small estates can supply the industry owned by big companies in partnership," he said at a seminar on forestry and the people's welfare Thursday.

Muslimin said major companies should instead support the development of small and medium companies both financially and technologically in a partnership program.

Under such a cooperation scheme, the major plantations would still be able to secure the future supply of the raw materials of their industry even though they did not expand their plantation acreages, the minister said.

"With the scheme, big plantation companies could expand their business without opening more plantation areas which need a lot of money."

He added that several giant plantation companies such as those under the Astra Group welcomed his idea and pledged to follow his recommendations.

Muslimin said his ministry also required concessionaires whose logging contracts had ended to transfer some part of their forest areas to cooperatives.

"We will not extend their logging rights if the concessionaires do not give some part of their shares to cooperatives." He added that the government was still revising the minimum size of the forests which should go to the cooperatives.

Current regulations state that concessionaires must give at least 3 percent of their forestry area to cooperatives, the minister said.

Earlier this month, Muslimin said the government was considering limiting corporate and personal ownership of the country's forest concessions to prevent a concentration of forest assets in the hands of a small number of companies.

He said a handful of business groups controlled most of the concessions.

Forest concession rights would be issued through an open bidding system in the future, he added, to give the public a better chance of benefiting from the country's forest resources.

He said open bidding would apply only to areas left vacant by suspended timber companies because the government would not open any more natural forests to logging operations.

Minister of Cooperatives and Small Enterprises Adi Sasono, who also addressed the seminar, suggested the government exempt the cooperatives which owned concessions rights from the obligation to pay reforestation funds, the resource rent tax and other forestry levies.

"It will be very helpful for the small capital cooperatives and small scale entrepreneurs."

At least 423 private companies are currently involved in logging activities on 61.7 million hectares.

According to the minister's data, Kayu Lapis Indonesia Group owned by Hunawan Widjajanto is the largest forest concession holder. It owns 3.5 million hectares of forest concession areas in the country, followed by Burhan Uray's Djajanti Group with 2.9 million hectares, Prajogo Pangestu's Barito Pacific Group with 2.7 million hectares and Mohamad "Bob" Hasan's Kalimanis Group with 1.6 million hectares.

The country's six state-owned forestry companies -- PT Inhutani I to V and Perum Perhutani -- have logging operations spread over approximately 2.3 million hectares.

The government first began to award forest concessions to private companies through the 1971 Forestry Law, which granted concessionaires the sole right to cultivate and exploit forests in their concession areas.

Last year, the government extended the length of the concessions from 30 years to 70 years. (gis)